In 2022, Philadelphia-based development firm Post Brothers bought two office buildings on Connecticut Avenue in Washington, D.C., with plans to convert them into approximately 530 residential units. Despite the site’s proximity to Dupont Circle and a coveted residential area, assembling a viable capital stack proved more challenging than anticipated.
Ultimately, a $465 million Commercial Property Assessed Clean Energy (C-PACE) loan from Nuveen Green Capital in December of 2025—billed as the largest ever originated under the program—made the conversion possible. The project, dubbed The Geneva, is a sign of the C-PACE program’s rapidly expanding role as a source of capital for development projects.
“We had just been through a brutal capital market,” says Matt Pestronk, cofounder and president of Post Brothers. “It was very serendipitous, how the project came about.” The company was about to enter into an agreement to take conventional financing when the company’s chief investment officer brought up the possibility of a C-PACE loan. “C-PACE financing was available on better terms than construction financing,” Pestronk says. “The total cost of all the financing was more attractive than we could have gotten through a mortgage and mezzanine loan, or through preferred or joint venture equity.” The C-PACE financing accompanies a $110 million first mortgage from Mavik Capital Management.
C-PACE allows property owners to finance qualifying improvements through special assessments on their property tax bills, typically with 25- to 30-year repayment terms. Industry experts say that the program has matured dramatically, as deal sizes increase and pricing becomes increasingly competitive with traditional bank financing. The previous record holder for the largest C-PACE transaction, according to Nuveen Green Capital, was a $290 million loan in September 2025 for the Pendry Hotel & Residences in Tampa, a new 38-story, mixed-use luxury condominium and hotel tower under construction by Two Roads Development.
C-PACE scales up
The C-PACE industry originated approximately $3.5 billion in 2025, up from $2.2 billion in 2024, says Anne Hill, senior vice president at Bayview PACE, citing the company’s internal numbers. Even more remarkable is the growth in deal size, she says: The average C-PACE transaction reached $40 million in 2025, double the $19 million average from the previous year.
“I started in this industry, in 2016; the first C-PACE securitization was done in 2017, and the average deal size was $800,000,” Hill notes. “So, the industry has gone, in 10 years, from having the average deal size of $800,000 to $40 million.”
This rapid scaling comes at a critical moment for commercial real estate. Kelly Souza, managing director for North Bridge, points to looming challenges for the industry: “We have about a $900 billion maturity wall for 2026, and a $1.3 trillion maturity wall for 2027.” C-PACE, she says, offers a highly efficient and flexible source of capital for misaligned capital stacks.
According to Chris Robbins, cofounder and managing principal at GreenRock, C-PACE financing can play an important role in improving the feasibility of office-to-residential conversions because of the breadth of capital expenditures it can support. “C-PACE can fund work across four primary categories,” Robbins says. “First are energy-efficiency measures, which include but are not limited to the building envelope, mechanical, and electrical systems. Second are water-conservation measures. Third is renewable and distributed energy infrastructure, such as solar, battery storage, and backup power systems, and EV charging systems.”
If someone explored C-PACE three or four years ago, it’s probably worth another look, because it’s far more broadly applicable today and can play a more significant role in the capital stack.”
The fourth category—resiliency measures—has become particularly significant, Robbins says: “These vary by state and may include seismic-related infrastructure, storm hardening, flood mitigation, and other measures that are often necessary to reposition older office buildings for residential use.” Because conversions typically require extensive upgrades to core building systems, he says, “40 percent or more of total hard and soft project costs are often C-PACE-eligible.”
The flexibility of C-PACE makes it particularly well suited for office-to-residential conversions. Hill reports seeing more of these conversions happening, with four large-scale deals currently in Bayview’s active pipeline. “You can get one loan that’s for mortgage and acquisition, and then C-PACE can typically cover the vast majority of the construction-related costs to get the project completed.”
Overcoming misconceptions
Outdated perceptions persist, but C-PACE has evolved significantly. “If someone explored C-PACE three or four years ago, it’s probably worth another look, because it’s far more broadly applicable today and can play a more significant role in the capital stack,” Souza says.
Early C-PACE was narrowly focused on energy efficiency and perceived as inflexible long-term capital unsuitable for bridge financing needs, Souza says. Programs have expanded eligibility criteria, however, particularly around resilience measures: “A larger percentage of project costs now are eligible under the programs,” she notes. Lenders have also adapted structurally, with tighter spreads, prepayment penalties tailored for shorter durations, and reduced negative arbitrage that plagued first-generation C-PACE.
Pestronk points out that the regulatory landscape posed obstacles in the past: C-PACE–enabling legislation had to pass at the state level, then gain approval from counties or municipalities that issue property tax assessments. “You could have a $200 million building in a small town, and if the town’s government doesn’t have more than a few full-time employees, they’re not equipped to quickly adopt this legislation,” he says. Today, 40 states and Washington, D.C., have passed C-PACE–enabling legislation.
Perhaps most significantly, pricing has become highly competitive, Hill says: “The cost of C-PACE has come down significantly, which makes it almost in line, in most cases, with where bank financing is.”
Hill also pushes back against perceptions of C-PACE as complex. “There’s this misconception that PACE is a new product and it’s a complicated process,” she says. “Really, it’s very straightforward, a simple closing in most states.” Unlike historic or new market tax credits, she notes, C-PACE is private capital operating under state legislation: “Approval is much more streamlined and simple than what borrowers or brokers might believe. We’ve closed deals in as little as 30 days.”
Looking ahead
The outlook for C-PACE appears robust. Hill describes 2026 as poised to be “a very active funding year in multifamily and all asset classes,” driven by abundant capital and increased lender aggressiveness after years of cautious positioning around inflation, tariffs, and supply concerns.
“We have financed approximately ten office conversions, six of which were completed in the past eighteen months,” says Chris Lawton, managing director and head of originations for Nuveen Green Capital, who worked with Post Brothers, Mavik, and D.C. Green Bank to devise the capital structure for The Geneva. “We expect to see continued growth in interest due to the increasing familiarity of C-PACE in the market and the demand for new conversion projects. We also anticipate replicating The Geneva structure on other projects in other markets.”
Pestronk sees continued growth ahead as well, particularly for larger projects. “I think C-PACE will continue to gain prevalence, especially for larger projects, as the capital markets continue to evolve,” he says. Most C-PACE is securitized or structured as a capital markets product rather than balance sheet lending, he says, which facilitates scaling: “This is just another form of private credit, so I think we’re . . . going to see more of it.”
For further reading:
